Visitors looks at interior of a model on display at a Toyota gallery in Tokyo.

TOKYO: Toyota said it was on track to book a record $17.5 billion full-year net profit, as Japan’s major automakers wrapped up a bumper earnings season, but the industry is facing headwinds from slower demand at home and in China.

The world’s biggest automaker revised up its fiscal year net profit forecast to 2.0 trillion yen from an earlier 1.78 trillion yen, and said full-year revenue would come in at 26.5 trillion yen, from a previous 25.7 trillion yen estimate. It also booked a 1.13 trillion yen net profit for the six months through September, from 1.00 trillion yen a year ago, while half-year revenue rose 3.3 percent to 12.94 trillion yen.

The report came a day after rival Nissan said its half-year net profit rose 25 percent to $2.3 billion and number-three Japanese automaker Honda last week reported a nearly 19 percent jump in its six-month net profit to $2.67 billion.

The Japanese auto industry has benefited from the big-spending policies of Prime Minister Shinzo Abe, with huge monetary easing measures from the premier’s hand-picked team at the Bank of Japan helping push down the yen since last year.

A weaker yen boosts the competitiveness of exporters and inflates their repatriated overseas profits, although analysts say the effect has been waning in recent months. “The lower yen is undoubtedly a tailwind but factors other than that have not improved significantly from the first quarter,” said Credit Suisse analyst Masahiro Akita.

“It is unclear how demand in China — a core market for Japanese automakers — will fare” in the coming months, he added.

Nissan and Honda both warned over slowing sales in China, while Toyota reported a decrease in sales across Asia, including Thailand, which has been hammered by political unrest.

Japanese automakers’ sales in China fell off a cliff in late 2012 and into last year as a Tokyo-Beijing row over disputed islands sparked a consumer boycott of Japanese brands in the world’s biggest vehicle market.

While demand has been recovering, rivals including General Motors and Volkswagen sought to capitalize on the diplomatic tussles by grabbing market share away from Japan’s top three automakers.

There are also growing fears about the entire industry’s prospects in China owing to concerns about the health of the world’s number-two economy. “I suppose there is still some of that (anti-Japanese sentiment), but they needed to justify their production cuts,” Christopher Richter, an auto analyst at brokerage CLSA in Tokyo, told AFP, referring to Nissan.

“Maybe they thought people would accept the Japanese brands a bit more quickly than they imagined. “The other difficult spot has been Japan…(but) performance in the US has been good, so that’s good news for US-oriented makers like Honda and Nissan.”

Toyota said half-year sales in Japan were down slightly at 1.03 million units, while it posted a rise in North America and Europe.

The automakers are also grappling with April’s sales tax rise that dented consumer spending in Japan, after millions rushed out to buy big-ticket items before prices went up, while a series of huge vehicle recalls have also pushed up costs.

Last month, US media reported that embattled Japanese auto parts maker Takata was facing a US class-action lawsuit over an air-bag defect that may have killed several drivers.

Takata is a major supplier to the world’s biggest automakers and the problems have sparked the recall of million of vehicles.

“We feel sorry about the great concerns and inconvenience imposed on our customers over the recalls due to Takata’s airbag,” Toyota executive vice president Nobuyori Kodaira told a news briefing in Tokyo Wednesday.

“We are preparing to replace the part with something of better quality. I will not comment on what Toyota would do in terms of its relationship with Takata,” he added.

Toyota trimmed its fiscal year vehicles sales estimate — to 9.05 million units from 9.1 million — but it left unchanged its forecast to sell 10.22 million vehicles in calendar year 2014.

 
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